The “nouvelle embauche” contract

Rédigé par Elisa Bernad le 20 Janvier 2006

Order n° 2005-893 of 2 August 2005

The media has greeted the arrival of this “new product” with scepticism – commenting that the work market place is already saturated with a number of different types of contracts of whose names, more than the content, change according to the government’s wishes.

However, it must be admitted that the “nouvelle embauche” contract is different from other contracts. Although it is only intended for businesses with 20 or less employees, it nevertheless concerns all contracts of indeterminate length in so far as the contract contains a trial period of 2 years which can be broken by the employer at any time (subject to respecting a notice period of 15 or 30 days) and without having to give any reason.

The employer does not have complete freedom to dismiss employees at will. The fact that the contract can be broken at any time does not exonerate the employer from respecting the rights of his employees. Similarly, a protected employee’s contract cannot be terminated without prior authorisation of the labor inspection.

The “nouvelle embauche” contract does not eliminate the risk of litigation where the employer terminates the contract without cause. It is anticipated that employees and even judges will pay more attention to whether or not the termination is founded or motivated by reasons related to an employee’s private life, political opinions or is discriminating (for example on grounds of religious beliefs or sexual orientation ).

This order is not a blank cheque for companies. Any termination of an employment contract that is not founded on professional inadequacy, disciplinary or economic grounds could incite employees to seek justice from the employment tribunals.

The fact that there does not have to be a reason for terminating the employment contract does not mean that there is no risk of litigation from employees. It is the employer’s responsibility to ensure that they effectively manage the employment contract. An employee whose contract has been terminated after nearly two years of service will benefit from the required 30 days notice period but it is advisable in any case to ensure that there is some provision in the contract relating to the end of the long trial period. Particular attention should be paid to employees on the “nouvelle embauche” contract and employers should ensure that periodic evaluations are in place between the employer and employee so that both parties are fully aware of the implications of the contract.

It may be that the “nouvelle embauche” contract is part of the response to unemployment but it will not allow companies to dispense with regularly training and evaluation of their employees. Employers who are not mindful of the implications of the new legislation could be caught out and indeed the first claim began one month after the introduction of the contract.